tv Squawk Box CNBC December 17, 2012 6:00am-9:00am EST
latest survey and president obama spoke at an evening vigil in the community of newtown, connecticut, raising the prospect of policy changes to stem gun violence. it is monday, december 17th, 2012 and "squawk box" begins right now. good morning, everyone. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. let's take a look at our lineup today. first off, bob doll will be giving us his lineup for stocks. that's coming up at 7:00 a.m. eastern time. at 8:00 eastern, a cnbc exclusive. david tepper, one of the world's top performing hedge fund managers will join us to give us some of his wisdom in a kaerc t
can't-miss interview. a lot to talk about with him. in the meantime, why don't we get to some of today's top stories. we could see some movement in the fiscal cliff negotiations. house speaker boehner offering to raise the top tax rates on those making over $1 million a year as well as other measures amounting to $1 trillion in new revenue. that's in exchange for an equal amount in spending cuts. the white house has not yet accepted the proposal. also, apple says it has sold more than 2 million in iphone 5s in china just over the last three days. that's the best ever debut for the iphone line in china. apple is china's second biggest market, although it did lose a lot of market share while they were waiting for that i5 to come out. and citi research has downgraded apple from a hold to a buy. you can see there just below $500. also, the national association for business
economics growth in 2013 to come in at 2.1% after growing by 2.2% in 2012. that would continue the same tepid growth that the country has seen since the recession ended back in mid 2009. and the nation is mourning the horrific event of friday in newtown, connecticut. president obama spoke last night about change. >> we can't kol rate this any more. these tragedies must end. and to end them, we must change. we will be told that the causes of such violence are complex, and that is true. no single law, no set of laws can eliminate evil from the world or event every senseless act of violence in our society. and earlier in the day, new york city mayor michael
bloomberg called on the president to lead the nation on the issue of gun control. >> it's time for the president, i think, to stand up and lead and tell this country what we should do. not go to congress and say, what you guys want to do. this should be his number one agenda. he's the president of the united states. and if he does nothing during his second term, something like 48,000 americans will be killed with illegal guns. that is roughly the number of americans killed in the whole vietnam war. so let's get to cnbc's washington correspondent john harwood to talk about how washington will handle the gun control issue. i guess that's what we'll talk about this time. we have a lot to talk to you about involving washington. i guess the lead, obviously, we would be talking about boehner, too, at some point, john. do you have comments on the gun control issue? >> well, i think you saw in the president's address last night,
a politician who had been deeply impacted by what happened, like the entire country has been impacted. and i think it is changing the calculus, the way he looks at political risk on this issue. democrats, as you know, joe, for some time has shied away from pushing gun control out of the believe that it is a loser for them politically. republicans have done well when democrats tried to push the gun control bill. there is a broad swath of public opinion that favors things like bans on assault weapons and high volume magazine clips for
weapons. i think the president is saying -- when he said on friday, even, before the speech last evening, he said that despite the political risk, we need to do something. i think that was him talking to himself and to other democrats to say, you know what? we cannot turn away from this issue. he also mentioneder issues, as well. he mentioned doing things with respect to the mentally ill. how ow society handles the mentally ill impacts situations of this kind. so i don't know that he's going to skis or the extent to which he'll succeed in getting things, but i think he is the cost benefit analysis in his own head and that of other democrats is changing. >> whatever we do, the end result is we need to make sure that children that go to school are protected. and then that is where the discussion starts. and -- >> and that's why this episode, because of just how young these children are, 6 years old, makes
it different even from the movie theater shooting in aurora, in which a lot of young people lost their lives or even virginia tech where you had college kids affected by that. this is a disht level and it makes it hit harder with people. >> john, how quickly do you think it will be until we see action? the farther we get away from these things, the harder it is to push reforms if, in fact, reforms are to be pushed? >> well, you know, i wouldn't expect congress to pass a bill in the next couple of weeks. so i would expect this to be an issue after that. obviously, we have a huge deficit issue to deal with. really, the marketplace is open right now for negotiations in a way that it wasn't until john
boehner conceded a need on tax increases for people at the top. so i would expect on parallel tracks, you're going to find a continued negotiation on the fiscal cliff with a signs of optimism right now that the spos pekt that we are going to avert the cliff. and then in the early part of 2013, i would expect shortly after the inauguration, the president would lay down a set of principles or steps that the country could take, could even be before his inauguration. congress takes office -- the new congress takes office before the president begins his new term, so you could see some things percolating on capitol hill. house more difficult than the senate, of course, because the republican leadership has not been supportive of these kind of measures, but i think
republicans will be be affected and look at their cost benefit, as well. >> although, john, it's stunning how congress is doing at this point. they haven't addressed the aid for sandy. it's now been six weeks after sandy and nothing has been done on that front. >> the gears move slowly, but the aide for andy will pass. it's just a question of when they get it done. and, of course, because that involves additional spending, that factors into the debt limit in the fiscal cliff negotiations, as well. >> john, do you know what is available to the president administratively, not legislatively in terms of gun regulation? >> first of all, all the issues related to enforcement of existing laws. >> what mayor bloomberg said is it was illegal weapons at that point that he was talking about. >> 77,000 for seven lives of
something. would the gun lobby argue for astringent background checks for mental illness? >> probably. it depends on how it's framed and how it's enforced. but, you know, they've taken a pretty doctrine-aire view towards opposing anything under the nose under the camel's tent. feinstein is now going to reintroduce that bill. she passed it in the clinton administration. when it expired in 2004, george w. bush was president. he was nominally in favor of extending it. democrats were in favor of it. but the president was not enthusiastically advocating it and democrats shied away from enthusiastically pushing for it because they feared it would harm them politically. >> and what about the gun show loophole? where does that stand? >> the gun show loophole, i
think -- i'm not entirely sure, andrew, i think it was closed in part, but there's a lot more that can be done on that and the gun lobby has resisted that. >> because this, obviously, his mother illegally bought these things. we've got some ideas -- >> i want to do a fingerprint. >> a fingerprint -- >> on every gun. >> where you couldn't even access it and they have that technology. >> i want it on every single gun. i want an education program. i want to make it harder to buy guns that know it is to get a driver's license. >> i think you need to go back to the 1994 -- it's a question of automatic and semi automatic. >> and if you air that with the technology and you get some education involved, and by the way, i don't know how you're going to pay for all this. >> even in the journal, it talks about the rifle which apparently was used, the bushmaster by the shooter, it's unclear whether it
would have been banned by the '94 law, although the magazines that were used would have been. >> if it had the fingerprint technology, he wouldn't have been able to use it. >> exactly. john, we'll get back to the -- apparently even as a bargaining chip raising the debt limit on -- that's on the table doing it now if you get some spending cuts and -- but i don't know. i don't know whether a million going up a couple of percentage points is going to be enough to satisfy -- >> probably not. but i think that's when you saturday negotiating over, okay, a million, well, maybe we go down to a half million. not all the way down to $250,000 family income. and i do think the debt limit portion of boehner's offer was significant because what he is saying -- and that's something that i think is triggering some optimism by the administration. what he was saying is we're not going to repeat this fight in two months. >> although boehner's office is pushing back on that, john. they're saying it would only
come if there are significant cuts to entitlement, as well. >> right. >> they've not put those two together. >> what they're saying, becky, is that we're not abandoning the principal that we want spending cuts commensurate or greater than the debt limit increase, but the question is when do you get those? when do you implement those? and if you put off the debt limit and fight for a year while you work on tax reform and entitlement reform, that gives you breathing space. we know that congress consumes all the breathing space and they don't have any oxygen when they get to the deadline. but still, that would ensure that we don't have a cliff in december and cliff in february, as well. >> all right. john, thanks. we'll see you later. >> you bet. >> all right. let's get a check on the markets this morning. last week, the markets ended flattest. the dow was down by about 0.2%. you also had the s&p futures down by about 0.3%. you can see right now as we've been taking a look at. >> of these boards going by that oil prices are down slightly
this morning. they're down about 22 cents to 86.51. also taking a look at the dollar or the yen. the euro is at 14 1.3150. futures are indicated slightly higher, at leave fout dow futures. the s&p future is up about 3.5 while the nasdaq futures are down by about 7.5 points. >> let's get an update from across the pond. kelly evans is standing by in london. miss evans. >> good morning andrew and everyone. we were looking higher before the open, but we've quickly seen the sell-off across the board. what's interesting about the story today is it's not so much as macro driven as micro. i want to show you a couple of the names we're hearing from this morning. i'll start with the good news, i guess. h&m, the retailer, did come out
with a sales decline in november comps, but it was less than expected. those shares responding up about 3%. more broadly, kpn is expanding its -- carlos slim bought more than a quarter stake in over the summer. the concerns is having to reinvest in a broad environment of sluggish revenue in order to stay profitable going forward. aggreko, this is a power generator supplier here in the uk, down 15% after it was talking about the outlook for 2013. more muted than what certainly people had been expecting. and holcim, the world's biggest cementmaker, it's reinvesting, taking write-downs and charges in its fourth quarter in order to cut operations in most of the of its european operations down 1.3%. certainly not as much as
adegreeso, but kind of a da room ter. i want to turn now to forex, show you what's happening with the euro first. over here, as you can see, we're down about .3%. that's consistent with what we're seeing across bourses. bond not all that interesting today. a bit of a mixed bag. and i'll end here, guys, on, of course, the dollar/yen. japan did have when aer being called transformative actions weekend. it still remains toes be seen whether shinzo abe is going to be the next prime minister. can it help spur the company back towards growth? remember, with currencies, it's all relative and there are a lot of other players around the world who are trying to weaken theirs, as well. so it could be an uphill climb or maybe i should say a downhill one. >> kelly, thanks. coming up, we're going to debate where the economy is headed in 2013 and how much the fiscal cliff matters to growth. we have a special edition of squawk at 8:00 a.m. eastern
time. remember that first interview we had with tepper a few years ago that made so much news. we'll have another rare interview with david tepper. it was 2010 and he sparked what became known as the tepper rally. it was really the squawk rally, but he tried to hijack that. what does he expect from the markets now? "squawk box" will return in just a moment. rivalry. rivalry. 'cause all our states are great. and now is when the gulf gets even better. the beaches and waters couldn't be more beautiful. take a boat ride or just lay in the sun. enjoy the wildlife and natural beauty. and don't forget our amazing seafood. so come to the gulf, you'll have a great time. especially in alabama. you mean mississippi. that's florida. say louisiana or there's no dessert. brought to you by bp and all of us who call the gulf home.
a couple weeks ago, we had two new york jets fans. but now it's a couple more. great game between seattle and pittsburgh. >> did that guy get his pants pulled off? >> certainly did. my question to you, you got -- wasn't it nance and phil sympathies? >> yeah. >> don't you say, wow, there's a full moon today? don't you say something? >> i had to back it up on the dvr. >> was it immature to say -- i backed it up to show -- because we were laughing so hard. do you just not ignore -- >> it says something about our maturity levels. >> does it? and they're month march temperature? >> i felt bad for the player, i did. >> i did, but thank god it wasn't a full frontal. it was a full moon back. i would have said something.
i wonder whether nance and simms should have just -- >> were they looking at it? >> they needed a joke. >> you needed to reference it. >> when they played the replay, they played it from a different angle. >> i think they -- come on, guys. in my entire life, i've never seen anything like that before. >> was it worse than janet jackson? >> no. janet jackson put herself in that position. this poor player. >> that is true. let's check on the weather real quick. lots of rain for the northeast. eric fisher. >> good morning. fully dressed for you on this monday morning. >> what have you done, eric? >> you could trip and it could happen. be careful. >> all right. here across the south, a rain
jacket will be your attire today. heavy rainfall from montgomery towards atlanta. stormy, especially for mid-december. this time of year, you don't think about severe weather. places like nashville, tallahass tallahassee, charleston, could you see a couple of tornados. certainly heavy rain. could see another inch around atlanta and into south carolina. drought, huge story here. rain will be welcomed as long as we don't see the severe storm. into the northeast, winter on the map this morning. especially around the mass pike and heading northward. freezing rain across massachusetts. if you like the snow, higher elevations in northwest maine. new hampshire, 3 to 6 inches of snow. is a big storm in the northwest. lots of snow from the cascades over into the rockies. a week before christmas, and
snow coming down. if you have a ski trip, looking better. >> thank you for that and he did it with his clothes done. we appreciate it. >> well done, eric. >> becky thought i was headed there. i was not. i had headed to how tight the division is. >> you're going to see naked football before they get into the playoffs this year. >> well, we did. >> are you still thinking how it could impact the jets? >> yes. >> that is sad. >> everybody was watching this game to see what it meant for other teams around the country. all right. the latest survey by the national association -- >> rutgers has a better chance of getting to the super bowl. that's kind of you to say. >> let's find out what kind of forecast our next guest has for the economy. michelle myers joins us on set for the rest of the hour. michelle, is this the best we can do, 2.1%, something growth like this? >> yeah.
we're looking for pretty slow growth, as well. for q4, we're tracking just above 1%. retail sales were above expectations. the trade data was supportive of q4 growth. we're ending the year on a soft note and heading into early next year, a lot of it will be driven by what we get out of washington. we're in the camp that we're going to have some significant austerity hits early next year. so personal income is going to set lower. consumer spending is going to struggle a bit. it will be offset from rebuilding of sandy, perhaps some clarity around the fiscal cliff if we get some resolution will help business investments. >> and to this point, it's been the consumer holding it up. if consumer spending starts to slow down, do they pull in the reins, anyway? >> that's the key question. if you think that businesses have cut even above and beyond
that was needed giveng the trends and demand, you would argue there is pent up demand. but if you think that the decline investment was appropriate, then it's going be a function. business investment going forward will be that going forward. >> what do you think? >> if you look at the sharp declining cutbacks, it was an extreme relative compared to what was happening in the rest of the economy. i think a lot of that has to do with the uncertainty. back in the spring, businesses started cutting back aggressively. and i think that was partly because of concern over europe. conference over china. businesses are running very, very clean right now. i do think there's capacity. >> and maybe that business investment will help the consumer who will feel the pinch of higher taxes? >> that's the hope ultimately is
that you get that multiplier. businesses and corporations have been doing well, they have cash on the balance sheets and they start lending. i think one of the other crucial components is credit creation. it can't just come from large corporations. it has to come from medium and small bess. coming up, bob doll gives us his outlook for the fed. linking rates to the unemployment rate. then at 8:00 eastern, a cnbc exclusive, david tepper, one of the world's top performing hedge fund managers will give us some of his investing wisdom and what will be a can't miss "squawk box" interview coming right back. [ penélope ] i found the best cafe in the world.
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good morning. and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. in the headlines this morning, house speaker john boehner is offering the white house higher rates on top earners as we thought we might head this way. and some other revenue measures now totalling about $1 trillion in new revenue, but he's asking for an equal amount in spending cuts in return and negotiations seem to be -- have a little bit
better chance of -- maybe. >> moving forward, we'll see. trading firm knight capital will hold a board meeting today as two firms consider increasing their bids for knight. "the wall street journal" doesn't like either one of them. bertu and get-go. >> gordon gekko. >> and hopefully if they all get together -- >> this is like the best buy thing. i don't know how good they can do. i'm just saying. >> is it going to change any of -- it's not going to change our lives that much if they do finally -- >> not much. >> people at home waiting. >> you sound annoyed. >> this is one of those deals with the business headlines -- >> do you think there are people at home going, honey, they're talking about that get-go -- >> that's my conversation in my home. my 2-year-old kid is talking about this. >> like you thought they might talk about it. anyway, apparently it's possible that knight's board may express
a preference for one offer over the other. >> henry and max sorkin have been discussing those between elmo and they're fighting it out. it almost sounds like he-he-he, hepco. >> he-he-he elmo. >> elmo is a boy. >> but he's 3. >> all right. what? >> all right. aig may raise as much as $6.5 million by selling its remaining stake in asia's aia group. reuters reports the offering price is about 3.6% below the stocks close in hong kong on friday. you might recall aig sold part of aia following the government bailout in 2008. let's get a check on the markets this morning. as we mentioned, the dow futures are indicated higher this
morning. you'll seat rye now that the dow futures are up by about 46 points, actually, gaining ground over the last half hour or so. at this point, the s&p futures are up by 5.2%. the s&p off was by 0.3%. taking a look at europe, you'll see at least in the early trading there as we flip the boards -- and i'm stretching for a time -- you'll see right now there are modest declines. right now, the ftse is down by about 31 points in france the cac is off by 14 points. in asia overnight, we did see marketed markets. hang seng was down .4%. shanghai composite was up by about 4.5%. oil prices have been off by about 22 cents the last time we checked. right now down by six cents to $86.67. the ten-year note at this hour is yielding 1.723%. wow. yields come back up.
i was out for about three days last week and yields have come back a little bit. dollar at this point is stronger against the euro. the euro is at 1.3159. we have seen the euro gaining ground. gold prices have been down slightly. down by 1,692. it's interesting to come back after three days and see it. >> it's telling the move would bring that reaction. >> it is. because it was stuck for so long. i haven't seen a 1.7 -- >> it went 8, 7, 6, 5, 4, 7 -- >> i haven't seen 1.7 in weeks and weeks. >> i was saying it's telling about how incredibly dead and -- telling about the ten-year, how boring and how narrow the range has been. like when greenspan said, i need
to see that. he hasn't needed to see it for a while. >> i don't think it is his favorite any more. >> it's like the allied financial commercial. do you know where cd rates will be in a year? can anyone tell you that? he says no and i say, yes, you can. they'll be at 1.7. >> more and more clarity. >> talk to mr. tepper at 8:00. i bet you he does know. >> people really say it's an awful year. >> we only have two more trading weeks left in 2012. the question is what should investors feel this week? allen nupman from option shop. we may not have a deal on the table, but it feels like we might be slightly closer, allen. how does the market think about it? >> that's all we can do from our
end here. watch for the market action. the market action has been relatively positive. i'm pretty encouraged by that. as that push tess dollar down, that could add support to a lot of markets over my shoulder here. >> how do you feel about gold right now? >> disappointing, at best. you've seen the dollar decline. as it goes below 80, usually that adds to the gold market. but gold and silver have been ashdz the pivots. you have to look at things on a weekly basis. i'm an options trader so i try to look at spreads three and six months out. but i'm feeling like i felt earlier this summer like with
gold, it formed a wedge with higher lows and lower highs. it looks like it may set up to the out side. >> are you a betting man? >> i don't bet on events. if i did, i would be in the news business like you guys. i would equate this to the fiscal ceiling next year. the market reacted very well last year. we saw after the downgraded debt, we saw an increase in demand and all-time low interest rates. i don't care what happens with fiscal cliff. obviously, i do, but i care how the market is going to react and i'm looking for a full v recovery, back up to 1470. and then if i add that 130 points that we dipped for those highs, i'm looking for the s&p to get to 1300. i think it's very attainable. that would be a full v recovery over the last 12 years from the last time we were at 1500 s&p.
>> allen, you're putting smiles on people's faces. let's hope you're right. thanks for joining thus morning. >> thank you very much. >> if you have comments or questions on anything you see here, e-mail us. next, the tragedy at newtown creates a new dialogue about gun control. we'll have former vermont governor howard dean and policy analyst david coppel. and then at 8:00 a.m. eastern, our exclusive interview with david tepper. we'll find out what he's doing after the fed's latest policy changes and what it means. "squawk box" coming right back. if you are one of the millions of men
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welcome back, everybody. we wait to see if there's a deal for the fiscal cliff. right now, you see dow futures are up about 4 had points close to fair value. nasdaq futures are down by 6.5. >> the nation continues to mourn the tragic events of friday when a gunman murdered 20 students and six teachers at sandy hook elementary school. as you know by now, it was in newtown, connecticut. president obama spoke last night, raising the prospects for gun policy changes. in the coming weeks, i'll use whatever power this office holds to engage my fellow citizens from law enforcement to
mental health professionals to parents and educators in an effort aimed at preventing more tragedies like this. because what choice do we have? we can't accept events like this as routine. >> joining us now, former vermont governor and cnbc contributor howard dean and david coppell at the cato institute. good morning. am i pronouncing that okay? is it copel? >> just fine. >> we all want the same thing. that is to make sure our children are as safe as they can possibly be when they're in school. how do we do that? does it involve new regulations for guns? >> well, i think the most important thing we can do when we look at all these mass murders and attempted mass
murders that are happened recently and over past decade sess one of the things that ties so many of them together is mental illness. the vast majority of the perpetrators are young males, late teens or early or mid 20s who we see at least afterwards were suffering from schizophrenia or some other serious mental disturbance. and one of the, i think, mistakes that we've made as a country over the last 50 years is own though the size of government at all levels have floed floated, and the treatment for them has been slashed. you know, part of the reason for that is that the mental health lobby compared to, say, the prison guard lobby. so i think one thing that i hope almost everybody could agree so is we need stronger laws on
civil commitment for the violently mentally ill and much more funding for treatment. >> i need to get a clear view. one thing that always comes back, if there's 234e6r -- it's awful to say, but if there is no break and when someone has to reload, it's impossible to stop this kind of thing. you're not allowed to buy a hand grenade, right, or an rpg or something hike that. why does a normal citizen have the need to have all these bullets and weapons and reload instantly? >> the issue has been always been a phony issue. it's based on the cosmetics of how guns look rather than on their function.
the guns that the prohibitionists want outlawed will function like every other gun. if you press the trigger once, one bullet comes out just like every other gun. connecticut is one of the minority states that has a ban on these so-called assault weapons that was enacted in 1993. so none of the guns used in this horrific murders were assault weapons by connecticut's definition. and i think that's an illustration that you don't do anything constructive for public safe safety. >> governor dean, how do you -- your lip res moving. i don't know if we heard you, but you were able to hear david, right? >> sure. you can't hear me? >> yeah. now i can hear you. >> okay. >> how would you respond to that? >> it's kind of a silly thing to say, talk about cosmetics and guns.
guns do make a difference. first of all, as much as i think funding mental health adequately, it won't prevent these tragedy dises. most of these people don't have a prior record of breakdowns. we can't constitutionalize everybody with a mental illness in this country. and the young man that perpetrated these horrendous murders had evidence that he was odd, but no evidence of violence whatsoever. so that solution is a -- is not going to solve the problem. secondly, incidentally, there was a -- and this is not the first time this has happened. in china, the day before this terrible krns somebody went into a classroom with a knife and stabbed a bunch of children. you do not need an assault weapon or a semi automatic rifle to hunt a deer. this is ridiculous. and we do need to deal with
these weapons. these weapons do not belong in the public's hands. you are correct, the idea that you'll pull the trigger and fire a single shot is absolutely not true. you pull the trigger and 30 or 40 or 50 or 100 shots go off. >> that's absolutely false, governor. you don't know what you're talking about if you're saying that. >> i certainly do know what i'm talking about. i've fired these guns before and the semi automatic does the same thing and i've fired those guns. >> that is preposterous. >> it's not preposterous. >> by the way, it's also the opposite of what you said when the people of governor of vermont elected you as governor and you were opposed to banning on these guns because you correctly at a time recognized that these were gun he is that you recognized when you pull the trigger one time you get one bullet. that's been severely regulated. -- >> the national rifle association is out of control.
the fact of the matter is, you do not need a semi automatic weapon to hunt a deer. and the fact of the matter is the nra members up here are sane, thoughtful people who were mostly huntes and they don't want their guns about anned because they like hunting. i'm sympathetic to that. >> criminals will be able to get those things. the authorities need these, right? you are saying that members of the public you don't want any semi automatic -- >> let me tell you what happened in australia. in aus trail yab they had 18 school shootings before 1981. they banned these things. they had a buyback and they haven't had a big school shooting like this for i think it's 18 years. so, listen, this stuff works. i'm not looking to ban guns. i'm looking to have some common sense gun regulations that make some sense. i heard an nra guy one time from washington say he had the right to have a bazooka in his house fechted to. that's insane. david, one of the things we've talked about this morning is the idea of trying to use technology
to solve some of these problems, including fingerprint technology where you would effectively lock a gun to a specific individual and hopefully they have been checked out when they register for the gun in the first place. how do you feel about that? >> sure. and gun companies are trying to manufacture those because there's a -- they could sell more guns to some customers who would like that. the problem is, you can't mandate them, certainly not at this point, because we tell existing state of the technology, they're not reliable enough. and that's why police officers who, like anybody else, has to have a gun for self-defense, absolutely you know, people try to use fingerprint readers all the times in various applications, whether it's say booting up the portable computer or things like that and people with experience in doing that know that sometimes those things don't work right away. so you -- it's absolutely premature to think of mandating something like that. >> we've got to go, howard. i just want to, just to broach the -- what some people are saying, should principals be
armed, howard? not -- >> it's ridiculous. why should principals at elementary schools have to carry guns around? that's crazy. >> i don't know if you can ever make sure that it's never going to happen and you're just at the mercy of whoever is armed at that point. >> what we're talking about in this country is doing things that every other democracy does, which is having sane, sensible gun laws. >> don't we already have those, howard? i don't know. it just -- a lot of places do. how many people were killed on that -- >> look, we're not going to eliminate these kinds of events. >> that's what i mean. >> the question is can we reduce them dramatically. a lot of people can go and get semiautomatics today that shouldn't have them. >> the governor got the last word. we have to do that to the governor. he holds a high public office. we appreciate both of your time today, thanks. okay, coming up, the next step for the u.s. economy, and we've got market master bob doll going to join us at 7:00 a.m. eastern time to tell us how
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"squawk" is back. let's get the last word for this hour from michelle meyer the senior u.s. economist at bank of america, merrill lynch. you're going to get some clients today asking what do you think of the fiscal cliff? and have things changed in your mind in terms of how you're advising them. what are you going to tell them?
>> i think i'm pretty encouraged by the news of the weekend. i think there's still a lot of negotiating that has to be done. but the fact that boehner is talking about revenues is talking about extending the debt ceiling for another year, provided it comes with some spending cuts, i think that's encouraging. it shows that at least in the public eye we're now hearing that there's real negotiating going on. >> do we go past january 1st? it doesn't matter? >> i -- i think if there's -- it's a close call. i don't think we go past january 1st. but i do think it matters. i think if we fall off the cliff, i think it will take a long time -- i don't think it's a bungee jump. i think it will take some time to get back. >> thank you for being with us today. >> when we return, more of today's top stories. plus, market strategist and "squawk" master, bob doll gets investors ready for the new year. and later, a cnbc exclusive. david tepper of appaloosa management gives the "squawk" gang some of his market wisdom. more "squawk" next. [ penélope ] i found the best cafe in the world.
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good morning, everyone. welcome to "squawk box" on cnbc. i'm becky quick along with andrew ross sorkin and joe kernen. futures this morning are up by about 52 points. s&p futures are up more than 5. nasdaq futures are slightly lower and probably because of what's happening with apple. also keep an eye on some of these stories this morning.
there may be some progress in the ongoing fiscal cliff talks. house speaker john boehner is delivering a trillion dollars in revenue enhancements, including higher tax rates on top earners. but he wants a trillion dollars in spending cuts from the white house in return. also, a fine of $1 billion or more is expected to be assessed against ubs, of libor regularing charges. it would be the second bank to be fined in connection with the scandal following a $450 million payment by barclays back in june. and apple has sold more than 2 million iphone 5s in china in the three days since the friday debut. that's the best debut for any iphone in the china market. apple shares remain under pressure, though, hitting nine-month lows last week and they have now been downgraded by citi, neutral from buy. >> and networking equipment company cisco hiring barclays to sell its lynxous home rueter unit. i have one of these things. according to reuters. cisco acquired the business for $500 million back in 2003.
it was expected to sell for less than that due to low margins. part of the company's strategy to spread its consumer unit and focus on software and technologies business service. >> this is a rotor, rooter? >> router. >> i honestly thought you were talking about roto rooters. not a rooter, a rueter. you have a rueter you just don't know how to say it? >> i go to rotter, rooter, router. >> they're still totally different. they're necessary in a house at any given time. >> i'm talking about the sink. i don't know what you're thinking about. or some type of human -- >> google may not face any major repercussion from the federal trade commission's 2-year-old antitrust investigation into its web search business. "the wall street journal" says the ftc might drop the investigation based on voluntary changes that google plans to
make to its search practices. the probe examined whether google tweaks its search results to put rivals at a disadvantage. the european commission, which is also probing google is expected to announce the decision next month. and the company is a little bit too successful for a lot of antitrust types, especially in europe and here. they're a little too good at what they do. >> not fair. not fair to their competitors. >> guys, we have some breaking news. a deal for sprint to acquire the remaining shares of clearwire has been struck. >> now we're waiting for knight. >> $2.97 a share as reported by our david faber last week. clearwire at about $10 million. be right there. clearwire down by % -- >> there was david's original piece. then there was a piece that it was closed referencing david. now a piece that it's done. all about $2.97. >> $2.97. >> not $2.98. and it was obviously -- go we
have an important serious story to get to. the horrific events at sandy hook elementary school in newtown, connecticut, opening up a new dialogue for gun control. the latest news out of washington about the newtown shootings. hampton. >> good morning, andrew. sadly we start with the fact that later today in newtown, connecticut, there will be the first two of the 20 funerals for the schoolchildren massacred in their classroom last week. sunday night, president obama remembered the victims offering words of hope and promises of action to stop future tragedies. >> in the coming weeks i'll use whatever power this office holds to engage my fellow citizens from law enforcement, to mental health professionals, to parents and educators, in an effort aimed at preventing more tragedies like this. because what choice do we have? we can't accept events like this as routine.
>> now, leading lawmakers are renewing their calls for tougher gun control measures. including in the coming weeks -- excuse me, from representative carolyn mccarthy, whose husband was killed in the 1993 long island railroad mass shooting, she's calling on president obama to back pre-existing legislation, basically to fix the background gun check system. quoting now, i ask you immediately to improve the flow of information into the system by requiring all federal agencies to share relevant information. california senator dianne feinstein said she will introduce legislation to bring back the ban on assault weapons, which was lifted in 2004, over the weekend we learned that in the aftermath of the shooting of arizona representative gabrielle giffords, the justice department offered recommendations to improve that background check system with more of a focus on screening out mentally ill persons. those recommendations, however, were shelved. and, in the aftermath of the newtown shooting, the atf, as part of its ongoing investigation, is actively
canvassing federally licensed gun shops and shooting ranges. joe? >> okay, hampton. thanks for that report. let's go now to newtown, connecticut. joining us is nbc's danielle lee and she joins us with more. danielle? >> good morning. people here are drawing comfort this morning in the president's promise last night during a vigil to do something to try to stop future mass shootings from happening. that said it doesn't remove the sadness in this community as they prepare today to lay to rest some of their youngest victims. the first two funerals will be this afternoon. they were among those remembered last night in that vigil that just drew hundreds of people, including the president. police say they are making progress trying to determine a motive in this shooting that left 27 people dead, as well as the shooter. we're expecting to hear from them in just a few hours. people here are just struggling to cope with this unimaginable crime. many saying they can't even imagine celebrating the christmas holiday now, just one
week away. in many ways, life here unfolds. the newtown schools close today. students who did not attend sandy hook elementary will begin returning to school tomorrow. it's going to be one small step toward recovery. but this is going to be a long, long road ahead. danielle leigh now back to you. >> thanks for that. coming up next we're going to count down to 2013 and welcome our guest host and squawk market master, bob doll, chief equity strategy at nuveen investments. he'll join us for the remainder of the show when we return. [ male announcer ] it's that time of year again. time for citi price rewind. because your daughter really wants that pink castle thing. and you really don't want to pay more than you have to. only citi price rewind automatically searches for the lowest price. and if it finds one, you get refunded the difference. just use your citi card and register your purchase online. have a super sparkly day! ok. [ male announcer ] now all you need is a magic carriage.
>> let's look now at how the ongoing fiscal cliff negotiations may impact the market for the remainder of 2012. bob doll is chief equity strategist and senior portfolio manager at nuveen. nuveen investments. answers that question. joins us for the next hour. bob, good morning. >> how are you, joe? >> i'm good. we have seen, you know, back and forth over the past three weeks or so, i guess this -- this was not necessarily a surprise, but new information that you can add to how you assess the likelihood of how we handle this. but most -- for most of this period, i would say we eventually expected something similar to this, didn't we? we always heard the eventual deal might be more than 250, might not be the full 4.6%, but there would be a marginal tax rate increase. so would you change anything based on what we heard from boehner over the last week? >> not really. as you say, we're moving in that direction. i'll give you a little of this
if you give me a little of that. let's hope they find something soon. we may not get anything done through january, joe. if we're running late the president uses the word framework every once in awhile. which means an outline of something. look in '13 i think there's a good chance we'll get something done. this business about do we fall off some big cliff january 1st? withholding can be changed by one simple act of the treasury secretary. so don't go off the cliff in that sense. secondly, the sequestration spending cuts, they can be delayed, as well. so i think even if we have nothing done on january 1st, we're not going off some cliff. >> but it's -- okay, good. so none of these awful things like raising more revenue, and cutting spending, none of those has to happen, we can just keep going like we are, spending like crazy, and you know, ten-point spread between what we spend and what we take in. >> that's a problem. >> that's a bad thing, is that any resolution that seems toothless just kicks the can down the road, which doesn't
help either. some people think we should just go over. >> it is pushing things out, kicking the can. but i think the rating agency threat, the fact that we have to do the sequestration at some point, they need to sit down and make some compromise. look, the president has had the upper hand right through this process, continues to. if we get the january 1st, we'll have the biggest tax increase in history, and the president can turn around on january 2nd and propose the biggest tax decrease in history for everybody under, and you pick the number. 250, a million, 500,000. >> that's why some senators want the gop to go ahead and pass -- go ahead and extend the bush tax cuts for everyone for the 98% of the taxpayers and say, okay, we're done, now it's your turn. what are you going to cut for us? and then tie the debt ceiling to that. >> i think that's where john boehner s.t.a.r.t.ed moving over the weekend. saying we get it. we're going to have to raise taxes for the wealthy. >> these guys actually want to go back to the bush era tax
rates on the top 2%. >> no question about it. >> but boehner is still saying, you know, a million is a long way from 250 and he didn't say raise it not necessarily to 39%. >> i think the president has indicated several times that he might be willing to raise the number from 250. so there's going to be a lot of horse trading here. i don't think it will be everybody above 250. >> is everyone making too much of it in terms of the investment decisions that they make? >> i think that the concern about going off some huge cliff january 1st is overdone. look, we got to get something done. and nothing done is going to continue to create this back and forth volatility that we've been stuck with. and the absence of forward progress that was so evident a few months ago. we're stuck because of this uncertainty. >> who is more affected? people that are investing in the stock market, or corporations and ceos that are trying to decide what to do -- >> i think the second influences the first. that is to say, the key in 2013 is to find a way to unlock the
massive savings that we're having going on in corporate america. and the reason they're sitting on the cash, and putting more under the mattress, is the absence of confidence. >> you know, we've been talking about the fiscal cliff solution as something that will unlock all of that. we just have some solution that it will get there. do you think that's the case or does it really require something that pushes them? >> we're always good at worrying about the next thing, so if we get this one solved we'll be worried about the debt ceiling, et cetera, et cetera. i don't know how many ceos and cfos said give me the rules. give me bad news. just tell knee what it is and then i can plan my business. uncertainty kills -- >> do you really buy the give me bad news and that certainty is good enough? >> i think having some, in the sand, this is the way it's going to be, will help businesses plan. whether that's an increase in everybody over 250, or over a million, tell me what the rules are. what's my corporate tax rate going to be? et cetera, et cetera.
there's just so much uncertainty. and that's why capital spending has dried up. >> do you have any confidence that, let's say we got a baby deal, we're going to still have uncertainty through next year, and i mean aren't we -- do you believe we're just living in a series of cliffs? there are arguments to be made that this new uncertainty is the certainty. >> there's some merit to that, joe already brought that up. what happens if we get something done, this next cliff, et cetera, et cetera. i don't disagree with that. but we have more uncertainty than we've seen in some time. look the consumer is spending a little more money. there are a few more jobs. house prices are up a little bit. so consumer confidence in the last few months has moved up. we need the same thing to happen on the business side. and i think this is part of the unlocking that story. >> we heard that the bond market is just set up for a fall. was what we heard from the fed, do you think that that's true? can the people that are worried
about inflation, do they have any power against the heavy hand of ben bernanke? >> it does seem to me that if you agree with the premise that the u.s. and the global economy are slowly and irregularly improving, and financial risks are slowly and irregularly receding, that's a recipe for a bottoming process in interest rates. from these very low levels. regardless of the fed. the fed has a lot to do with it, i don't disagree with that. but i think we're in the process of making that major bottom if you agree with those two assumptions. >> do you believe we're in a bond bubble? on corporates? >> are bonds expensive? yes. bubbles mean lots of leverage, et cetera. >> did you see the story in "the wall street journal" today? debt loads climb in buyout deals. we're back to 2006 levels in terms of private equity transactions, both in terms of the amount of debt being put on -- we're talking about 31%
equity. we've gone off to about 44% equity. that's meaningful. >> with rates this low, there's an incentive to do that. that's part of the issue with these very low rates. they're telling people go out and borrow all you can because you don't have to pay anything. >> seems a little crazy that the fed is now tying it to very explosive unemployment rates. some people say it's all about clarity. to me it's about boxing yourself in a corner. >> i'm with you, becky. i think the boxing in a corner is the story. seems every few months they seem to do something and they box more in a corner. my view is the markets will tell the fed when to raise rates. they're not going to lead it, they're going to follow it. just watch the markets. and they're not showing a lot of signs of that yet. >> i understand you want some transparency with what the fed is doing but at some point, my gosh, you've got -- >> i'm thoroughly with you. i think they're feeling the more clarity we can provide, maybe the better off people will be. but i think having the
flexibility to do things is the right move for the fed. >> all right. we'll continue this conversation in a second bob, thanks. coming up, some key housing data will be out later this week and we're going to speak to hovnanian ceo. about boomerang buyers and the state of the business. it's all leading up to our very special interview with ap loosea management's david tepper. [ penélope ] i found the best cafe in the world. nespresso. where i never have to compromise on anything. ♪ where just one touch creates the perfect coffee. where every cappuccino and latte is only made with fresh milk. and where the staff is exceptionally friendly. ♪ nespresso. what else?
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it was a record-breaking box office debut for time warner's "the hobbit," took in $84.4 million of north american sales. the previous december record was held by the will smith movie "i am legend." that one took in $77.2 million in 2007. our guest host for the hour is bob doll. and bob, i was just looking through the "usa today" money section. you're on the cover of it. >> i see. >> in the investment roundtable section. it says here that the biggest issue, biggest deciding factor for how the next year is in terms of market is going to be washington? >> politics is the biggest risk. absent that risk there's some good things happening. but that risk can trump everything if they make the wrong move back to an earlier conversation. >> we speak with michelle meyer in the last hour and she's really concerned that no matter what happens, because you're going to see some sort of a deal it's going to mean some austerity.
that very likely is going to cut into the consumer. if you don't have the businesses stepping back up in terms of investment is that going to be the vicious cycle that kind of kicks in? >> yeah, we need corporations to step up back to this uncertainty. if we get a little less unstirn, some of that cash needs to be put to work. consumers aren't going to carry this thing by themselves. yet i would argue, a minus 4 on gdp from the fiscal cliff if nothing gets changed, versus what's called a minus 1.5, which is probably more likely when the dust settles. we can manage with that. >> here's my concern, though, a lot of businesses have already made their plans for 2013. washington has set up already. so we get some sort of clarity, some sort of a plan, that's what the businesses have been asking for but it's not going to change things until late 2013, if not into two 2014. >> i think you're right, they've made their plans. in the environment changes they have all this cash they can make changes and make increment at purchases. at a plant somewhere, hire a worker or two, engage in m&a if
they have more confidence in the future. so i think they can turn things around. but they need more confidence and that's a big if. >> bob's going to be with us for the rest of the hour. >> okay, you've got comments, questions about anything you see on "squawk," shoot us an e-mail, you can also follow us on twitter @squawkcnbc is our handle. when we return, the tragedy in newtown parking the gun control controversy in washington. we're going to talk about it, and then later, why hovnanian is betting on boomerang buyers. the company's ceo is here as we get ready for key housing data later this week. [ male announcer ] at scottrade,
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welcome back to "squawk box." in our headlines on this monday morning, it is official. sprint has struck a deal to buy the part of clearwire that it doesn't already own for $2.97 a share. last week some clearwire shareholders had said that they wanted a higher offer. but reports said that japan's softbank, which is acquiring a 70% stake in sprint wanted to put a cap on how much sprint could offer. also walmart is cutting the price of certain popular apple products in hopes of luring more shoppers. get this, among the items that you will find on sale is the third generation ipad. also the 16 gigabyte version of the iphone 5. so, hey, if you haven't shopped and bought everything yet, take a look there. also economists see tepid growth continuing in 2013. the latest survey from the national association for business economics puts growth next year at 2.1%. that compares to this year's projected 2.2% rate. joe? >> thanks, beck. president obama spoke last night in newtown, connecticut, saying
things must change following last week's tragedy. >> we can't tolerate this anymore. these tragedies must end. and to end them we must change. we will be told that the causes of such violence are complex and that is true. no single law, no set of laws, can eliminate evil from the world or prevent every senseless act of violence in our society. >> mary thompson is here to take a closer look at gun sales trends both before and after the election, and then in light of the recent tragedies, and we had -- there had been articles written and pieces done gun s e sal sales going up prior to this latest presidential election. >> you know, it's an interesting thing to watch, joe, because it calls for a change in gun laws.
likely to spur near-term increase in sales for the multibillion dollar gun and ammunitions industry. in the wake of a mass shooting like friday, some americans will guy guns for protection. more will reportedly buy guns fearing their ability to do so will be threatened in the future. this fear drives sales or at least an interest in them. local reports after the shootings in aurora colorado and tucson, arizona, saw a jump in application for licenses. gun manufacturing has seen a pickup in recent years. the peak in 1994, topping with when the now expired ban on assault rifles became effective. manufacturing declined bottoming in 2001 and increasing markedly since 2008. part of the reason, enthusiasts expect an obama presidency to bring tighter rules for gun ownership. this hasn't happened yet but fears of stricter gun control reflected in the charts of publicly traded manufacturers like smith&wesson and stern rogers, both shooting jumps in
prices in 2008 when obama was first elected suggesting higher sales and a strong run-up to this year's elections. now this year the fbi has conducted a record 16.8 million background checks. linked to the application for gun permits. in the u.s., where an estimated 300 million guns are owned by the roughly 314 million citizens it's difficult to tell whether this translates directly into higher sales, for a number of reasons, bemyal at point of sale, failure to follow through by applicant, or multiple gun purchases by an individual. but it is reflective of a new renewed interest in gun ownership over the last few years >> thank you, mary. >> interesting statistics by the way. not only do we have 300 million. but apparently only 3 out of 10 households or 4 out of 10 households that have the gun. >> a gallup survey -- >> 45% of americans hold that gun. >> 45? >> and two guns per person. multiple guns. >> i'm curious does anyone here
own a gun? >> i do not have a gun. although i have -- i've applied to be able to get one. i don't know if i will. but -- >> so you could be one of the applicants? >> i could be the applicant who doesn't buy one. never a gun owner. >> growing up, but i don't have one at home. >> multiple guns. >> but 45%. that's -- >> but they don't do it anymore. >> interesting. the camp that i used to go to, summer camp, but they apparently stopped it. they still do archery, though. joining us on the "squawk" newsline with his thoughts on gun control, clayton cramer, an adjunct ack upty at the college of western idaho. his report has been cited, and he's also the brother of a new book "my brother ron" which focuses on mental health issues. good morning to you, clayton. >> good morning. thanks for bringing me on. >> big question we're trying to
resolve this morning. i don't know if we're going to be able to do it, how do we zeal both with the gun control issue but perhaps as important, the mental health issues that revolve around this and controlling both of those things at the same time? >> well, you know, i'd like to make the point that the real issue here is mental health problems. because we have a surprising number of murders in the united states. typically 500 to 600 a year involving mentally ill offenders. and most of them get no attention at all. because, sometimes they're using a knife or a sword to kill, you know, one or two people, and it's a local news story. relatively rare instance these sort of random acts of mass murder when they involve a firearm, we pay a lot more attention. but the core problem is mental illness. 1960s when i was growing up, i can remember one such incident, that was the university of texas, and it was shocking,
because people didn't do that sort of thing. murder happened but it was a rational purpose to it. someone was angry. someone was committing a robbery. someone was a witness to a crime. but these random murders of complete strangers, for whom the killer has no involvement, those are pretty modern thing. those are largely 1970s, to the present. >> clayton, we had howard dean on earlier and he said you have to solve the gun problem too hard to solve for the mental health issue, if you will. how do you consider that issue? >> to my way of thinking if you focus primarily on the weapon, you're going to ignore the problem of people who are using other weapons. and assault weapon bans, for example, one of the reasons that the study done in 1997 by the justice department concluded that the assault weapon ban the federal government had passed had been ineffective is because it's too easy to substitute
other, much more ordinary-looking guns -- >> you can't kill as many people with a knife. or a handgun that isn't a semiautomatic for example. >> there aren't that many nonsemiautomatic handguns anymore in the united states. police departments generally issue semiautomatic handguns. most people who have permits to carry handguns are carrying semiautomatics. they've been pretty much the norm for most of the last 40 years. >> clayton, i read an article recently just about mental health funding, and i know it's gotten much worse since the recession. i was reading that states have cut something like $1.8 billion just in 2009, because they've been so hard-pressed to find ways to come up with this money. isn't this a problem that the states need to address or you think the federal government needs to address? >> it's primarily a state-level issue. one thing people don't realize, one of the things so many states, for example colorado, closed two mental hospitals in the last few years, one of the reasons so many of these states
closed mental hospitals, or reduced funding, is because the legal changes of the 1970s made it increasingly difficult to hospitalize someone against their will, until they had pretty much killed someone or gotten very close to it. one of the james holmes-a-psychiatrist there in aurora, contacted police. she broke patient/dr. confidentiality because we recognized that he represented a very real danger to the public. the police couldn't do anything about it. colorado's emergency commitment law like that of most states requires a person has to be an imminent danger to self and others. >> clayton, i think about, you know, how we try to figure out who is possibly a person who could perpetrate a gun crime and i guess we worry about, you think domestic violence, crimes of passion, you don't necessarily think that those people had pre-existing mental illness for that to happen.
but, to do like a mass murder of strangers or children, just de facto seems like there has to be a mental health issue. people generally, going along what we would construe as normal upstanding citizens, they don't all of a sudden just snap and do something like this. >> no. >> is that safe to say? >> for the most part, people that commit any sort of murder are fairly atypical. yeah, you do have examples of people who, law-abiding people with no previous history who suddenly one day become murderers. that's fairly unusual. most of the time you can identify a person who commits murder in advance. they have usually felony convictions, they're often murders are committed by minors, or they're people with previous mental illness histories that are often well known to the authorities by the time they come to the attention of the public in a mass shooting incident like this. >> real quick because we have to go, i've been pitching an idea
all morning about technology and this fingerprint technology being able to associate an individual with a weapon. your thoughts? >> the difficulty is, that there's all sorts of clifr people who could figure out how to break these sort of rules. i mean -- >> should we be settling for that? we have a tsa example at the airport basically solving for one crazy person in a shoe bomber. i mean -- >> the problem is, we aren't talking about one crazy person. we're looking at typically 500 to 600 murders a year being done by people with serious mental illness problems. and we need to work a little harder on finding ways to identify people that have got those problems, and if they've been committed to a hospital, that puts them into the national background check system so they can't buy a firearm. >> clayton, heartless sociopathic criminals, sociopaths, no remorse whatsoever, are they mentally ill? >> no, not generally. most murderers -- >> then there's a lot of
murderers just by mean -- >> yeah, there are. and we haven't found much of a solution to that problem, unfortunately. and that's really where most of our murders are. these grand mass murders, they're heart wrenching, but they are typically far less than 1% of u.s. murders. >> so out of the 47, 856 people murdered in the u.s. by firearms, how many were -- how often is mental illness involved? a fraction? >> no. there were only 13,000 murders in the united states last year. >> oh, okay, this is between two,000 six and 2010. i have seen people conflating that, though. i just heard bloomberg say 48,000 -- >> in fact, more than half of u.s. firearms deaths are suicides. people don't just forget about. you know, about half -- typically about 60% to 65% of u.s. murders are committed with firearms. and for the most part those are not mentally ill people, they're also news stories that no one
pays attention to, they're usually one minority teenage male killing another minority teenage male in a gang or drug related dispute. unfortunately that seems to be something no one really much cares what happens down there. >> clayton, thank you for joining us this morning for this very important conversation. >> thank you very much. >> bye-bye. >> all right, up next, they are being called boomerang buyers. those people who have gone through foreclosures after the housing crash and are now back in the market to buy. hovnanian ceo ara hovnanian will tell us what builds are doing to prepare for the influx of buyers. also at the top of the next hour. his last appearance on "squawk box" sparked what was known as the tepper rally. what will david tepper say this time and how will the markets react? we're going to find out when he joins us at the top of the hour. at optionsxpress we're all about options trading.
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>> kwl checking futures right now, indicated up about 37 points. just about erased friday's losses. earlier this hour, a deal for sprint. >> david faber. >> to acquire the remaining shares of clearwire has been struck. the price $2.97 a share is reported by our david faber last week. the deal, values clearwire at about $10 billion. quite a few shares outstanding. $2.97. $10 billion. >> all right let's get a final hang from our guest host this hour, bob doll. chief ek quitty strategist and senior portfolio manager at nuveen investments. bob, we talked an awful lot about what washington needs in all of this. really when you look at the year ahead, washington aside, how are things doing both on the business and consumer levels? >> okay.
muddle through. more of the same. maybe a little bit better. we talked about consumer confidence getting a little bit better. business confidence a little bit better. we're not going to set any records. europe, probably a negative number at least the first half. less than we saw last year. we didn't talk about china at all. china is evidencing, from every angle, a soft landing. >> well, they're not talking about doing any additional big stimulus package? >> they probably don't need to. so we're that going to get acceleration on the other side but we're not going to have this fall, and where is this going to stop? if you have china, okay. the u.s. a little better. europe less bad. it's going to be an okay economic -- >> you get everything you want, fiscal cliffwise and we actually start tackling some of these long-term issues, you know diffident taxes are heading up. what -- is the market spring loaded so that if we get what we want it will be a really solid advance that we get? >> solid, look, joe, and in a muddle through economy solid is only a mid teen number.
we're not going to get 30% gain. >> put the two years together we could have 30, if we get some of the things -- >> we had three straight years at 30. >> that was a different world. earnings were higher. they're flagging a bit now. >> if everybody gets what they want with this, even the corporations aren't suddenly unleashed, either, with all their corporate -- >> it's going to be slow. the linger of the debt wind-down and the residual issues. that takes years to unravel. >> we have not talked individual stocks. when you see what's happened with apple, what do you think? >> apple starting to have more competition. it's still year-to-date been a great stock. but it's not a monolithic, they do everything right. they've got some people nipping at their heels, finally, finally, finally. >> would you buy, though, after the big drop -- >> i'd be patient. look, it's a lot more
interesting here. but i think this is going to wallow around and have to collect itself. >> it could be today. >> it was earlier this morning. >> just this morning. >> you picked some up. >> i'd be slow about it. i think you're going to have a chance to buy apple. i don't think it's going to turn around and go right back up. when you start having no competition, i'm exaggerating, to some competition, it takes awhile to sort -- >> does apple need another innovation, or just a bit more penetration of the iphone and things like that? they need something else? >> for the stock to run again, it needs -- >> what is there? >> everything's already been -- >> there's the multiple -- >> yeah. >> it's one of the very few, very big kept stocks that really never had multiple expansion. >> $600 billion. there's plenty of -- there's plenty of positive feelings in that stock >> no question. >> people have acted on their positive feelings. >> it's all been on earnings. >> bob, thank you. so much for joining us. >> thank you, happy holidays. >> you, too, happy holidays.
welcome back, everybody. boomerang buying is picking up steam in the housing market. boomerang buying refers to buyers who lost their homes to foreclosure but are now back in the market. ara hovnanian is the chairman and ceo of hovnanian enterprises. he joins us with more on this as well as the potential fiscal cliff impact on the real estate market. i had not heard of boomerang buyers. how many of them are there?
>> i would not say it's an overwhelming part of the market. but the market is growing and part of it is due to the boomerang component. >> these are people back in the market. are these risky buyers because they've gone through foreclosure? hoar how do you and the industry look at these people? >> you know, they are buyers that recognize they made a mistake. believe in home ownership. they know the long -- over the long-term, inspite of the recent debacle, it's been a good thing. and are anxious to get into the market. it's not unlike a divorced couple wanting to get remarried again. or someone that's been in a car accident wanting to buy a car again and drive again. same thing with homeowners that have made a mistake and are anxious to get into the market. >> you know, one of the things i was surprised by is you say that people are moving towards bigger houses. i mean, i kind of expected the opposite to happen. that people would look at the cost of owning a home, if you start looking at some of the mortgage deductions, whether or not those will be allowed over a certain limit, i expect to see
people moving into smaller but that's not what you're seeing? >> interest in the beginning of the slowdown, that was the first movement. people were downsizing in price, and size, but, in fact, with rates where they are, with prices having come down to where they are, the monthly payments allow them to get more house in a safe range of monthly payments than they were able to do five years ago. >> and in terms of prices, we've talked a lot of times over the years about what buyers have to do or sellers have to do to incentivize buyers, i know you were giving away a lot of extras to get people back into them. do you still have to do things like that or are the prices themselves enough of an incentive? >> prices have changed. prices are now going the other way. we announced with our quarterly call a few days ago that we raised prices this year in 60% of our communities. so prices are finally starting to increase after a long
decline. >> you hear from the fed and we expect that rates are going to be at these low, low levels for eternity at this point. what do you tell people when they're looking at buying and what mortgage rates are now? >> i think everyone will look back five years from now, that hasn't bought a house and said what was i thinking? we're at historic low rates. prices have been adjusted to levels that we haven't seen in six or seven years. it's a perfect combination. and we're reminding people of that. anyone that looks back at the affordability index knows that this is one of the best times to get back into the market. >> people may have a little bit of time. five years from now is one story, a year from now are they still going to think that? >> i think so because prices are absolutely on the rise. everything is relative. we're up to about 890,000 starts. average is 1.6 million so we've got a long way to go. there will be a lot of price increases as this market is
recovering. >> ara, thank you for joining us. >> glad to be here. >> up next, the interview of the morning. appaloosa founder and billionaire david tepper joins us two years after that epic bullish call that he made. find out how he's feeling about the markets right at this point. [ penélope ] i found the best cafe in the world. nespresso. where i never have to compromise on anything. ♪ where just one touch creates the perfect coffee.
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well, having a ton of locations doesn't hurt. and a santa to boot! [ chuckles ] right, baby. oh, sir. that is a customer. oh...sorry about that. [ male announcer ] break from the holiday stress. fedex office. fasten your seat belts, it's tepper time. his comments about fed easing on "squawk" "squawk" in 2010 sparked a market rally. >> the economy is not going to pick up in the next three months and the fed is going to come in with qe. then what's going to do well? everything for the near term. everything. >> appaloosa management founder david tepper is back. we'll ask him about the fed's latest move.
the markets. and the looming fiscal cliff. a very special hour of "squawk box" starts right now. welcome back to "squawk box" here on cnbc. first in business worldwide. i'm joe kernen along with becky quick and andrew ross sorkin. our special guest this hour, david tepper. we're going to get to him in just a minute. first, though, andrew is going to go over our morning headlines. >> house speaker john boehner offering the white house higher rates on top earners and other revenue measures totally about a trillion dollars in new revenue. he's also asking for equal amount in spending cuts in return. this is seen by some as the first real movement in the fiscal cliff talks. the white house has not accepted that proposal. of course, the nation remains in mourning after the horrific events of friday when a gunman murdered 20 students, 6 teaches at sandy hook elementary in
newtown, connecticut. the first two funerals will be held today. president obama speak last night about change. >> we can't tolerate this anymore. these tragedies must end. and to end them we must change. we will be told that the causes of such violence are complex. and that is true. no single law, no set of laws, can eliminate evil from the world or prevent every senseless act of violence in our society. >> earlier in the day, new york city mayor michael bloomberg called on the president to lead the nation on the issue of gun control. >> it's time for the president, i think, to stand up and lead and tell this country what we should do. not go to congress and say, what you guys want to do. this should be his number one agenda. he's the president of the united states.
and if he does nothing during his second term, something like 48,000 americans will be killed with illegal guns. that is roughly the number of americans killed in the whole vietnam war. >> to the markets now, which what we do here. but obvious, when things like friday happens it's tough to focus on markets. but we're going to because that's what we do. up 41 points is where the futures are this morning. overseas in asia, take a quick look, and know maybe what we're in for here. not much happening. a couple of up markets all over, the hang seng is down over in europe, which may impact us even more directly. a quick look, all red arrows but nothing too substantial at this point. >> our "squawk" newsmaker this hour runs one of the world's most successful hedge funds. he's known in the industry for being a first mover in the distressed markets. joining us for a rare, exclusive
interview is david tepper, the founder, president and chief investment officer of appaloosa management with nearly $16 billion in assets under management, that fund, by the way, is up an impressive 35% gross and 25% net on the year. it is a pleasure to have you here. >> nice to see you, becky. >> the last time you joined us, you made the tepper call, the tepper move as we watched everything that happened. you laid things out and opened our eyes, i will say, to what was happening with the federal reserve at that point. you said no matter what, you should be betting on stocks in just about everything at that point, because either the economy would improve, or the fed would step in and make sure the markets didn't collapse. that's exactly what has happened since then. but, could you imagine what the fed's done to this point? >> yeah. before we talk about that stuff, because, i got to just say one thing, my heart also is breaking after friday. and i just want to give my prayers to the people up in newtown. every parent's is just dying inside on friday.
you know, i love kids, and seeing those kids, what happened to them is just horrible. i hope we do do something with automatic guns in this country, semiautomatic guns in this country. i just wanted to say that, hopefully that does something for the folks up there >> this is something -- >> so much more important. than anything we're going to talk about today. and i just had to say that because it's just my feeling, you know, in my chest is just heavy with it. >> can't imagine as a parent what these people are going through. >> unimaginable. that's why we have to pray for those parents up there. get that out so that i think everybody in the united states feels that way. >> you're right. as the president last night, newtown is not alone. >> yeah, it's everybody. it's every town. >> when you look at what the market's been doing you did make the right call last time around. like i said, you opened our eyes. we should have probably seen it coming. you were the one kind of laid it
out for us. what do you think of what the fed has been doing? >> well, look, i mean the fed they made announcement, habit, what they said in front of me here, listen, you have a pretty good economy right now. you have an economy that has tilt winds instead of headwinds of housing and autos. you have an economy that's probably growing 2% give or take. question is, do you need the fed to do anything more? you know, it's a good question. why did they do this? and, you know, they basically have taken the mandate of full employment, and run with it. everything they're doing is to get this employment rate down or try to get this employment right down. the question you have to ask is what happens when they do that? you know, look, i mean, the last time i remember, and you guys can't remember -- >> you were on a subsequent --
>> the last time i can remember -- you're 56, i'm in my 50s. >> you're 55. >> i know you look a lot older than me. anybody want to pin up on the wrinkles on joe versus me. >> it may be sprinkled. >> it's a very close-up if you can do it. >> hair is everything. >> hair is everything. which, by the way, what color dye are you using? >> there's no die. >> come on. >> really? >> yeah. >> i've sworn -- nobody -- nobody believes you. >> i believe him. >> they say the hair is real. >> i'm not going to have people sit here and play with it. i get it cut in here -- >> you're too cheap to get a hair cut out of here? >> we both do. >> i believe that. >> we did have you on again after your initial call and you were right the second time, too, because you said, look, it's not the way it was before. we've had most of the movement, and you don't expect it. >> i'm just wondering, did you in your wildest dreams did you think the fed would go this -- you said they would keep doing
things until the economy improved. did you have any idea they would -- >> look, i'm looking at their central forecast. i have it right here. and how long did it go for? i don't know if people look at these numbers behind the numbers. to get to their central forecast of t2015. >> you mean based on unemployment? >> unemployment. who's the other bald guy that comes on here? >> liesman. >> liesman. good-looking guy. bald guy. he said they did have in the statement, they said substantially here. i kind of viewed they did have it in the statement. they're going to keep doing thissing in the unemployment rate goes down. >> 85 billion a month. >> how much does that add up in a year, times stwel, joe? >> like a trillion. >> a little bit more. >> we're doing a trillion a year. >> and we were worried about a $3 trillion -- >> let me ask you a question. we're going to get into where markets are and what you think about markets. >> i wonder what you think. >> i'm going to tell you. you think the same thing. so if you go back, what do i have now? i have an economy that's improving.
right? it's a good economy. i got tail winds. >> but you've got lousy unemployment. >> lousy -- yeah, and they're trying to do something with it, right? i've got an economy that has tailwinds. housing, auto. right? >> uh-huh. >> and, it's a growing economy. and now i'm going to put a trillion dollars a year by the fed, a trillion, what do you say, a billion here, a billion there? i think now we're into a trillion here. a trillion. so we got a trillion a year this year. looks like on this tendency a trillion a year next year or a good part through the year. unless we start picking up. i hope it picks up faster. we can talk about what they're going to do in d.c. and how they can help it. and how everybody in this country is tired of the people in d.c. and this b.s. that, yes i'm trying to keep it clean, still. >> okay. >> look if i was going to go and look at this market the last time i had this good of an economy, look at the united states of america. looking at the ldp that got elected.
everybody knows that japan is going to kind of pump it up starting in march/april. an ecb that has given you two different things and people only read one thing. they gave you the put with the omp with spain but they gave you a second put which you guys didn't talk about which is amazing. >> what's the second piece of it then? >> the second piece was when they were just this last meeting and you had this vote, how did the vote go? you know how the vote went for lower interest rates? you guys know how -- can somebody put on their prompter so they can figure out what it is? how did the vote go for lower interest rates? i'll tell you how the vote went. lower interest rates. they didn't lower interest rates this time. what they said, though, if you go back and look at it, every member before voted for lower interest rates. majority for lower interest rates. who didn't vote for lower interest rates? it was azulman, if my pronunciation is wrong, there's no way i'm going to get it right. pittsburgh people, what are you
going to do. and this other guy draghi. and there was a fourth guy, begins with a "c." basically you're in this situation, whenever draghi wants to lower interest rates in europe, he can do it. >> but we haven't understood why they haven't done it to this point. >> because of technical reasons. if you go to negative rates there's a whole issue of whether you can go to negative rates. this is, you know, euro gets too strong, boom -- >> they haven't done it to this point. if you need a lower euro to solve your problem why don't you do what everybody else -- >> there's the political wrangling that goes on over there. you do have it, any time he wants, it's in his pockets. >> is it just until angela merkel is in a better position? >> it's in draghi's hands. theoretically, right? he can do what he wants to do when he wants to do it. >> okay. that part of the equation don't surprise me because i've been waiting for them to do this anyway. >> everybody has been waiting, too, but the more important thing about waiting is you know
it can happen on a moment's notice. >> right. >> okay, because the way the votes settle. okay, was there more reported? kind of markets kind of moved a little. you had the euro move. you had the two-year swap over in europe move. the bundesbank, whatever it is over in germany, 44 basis points to 31. so that market moved. did have some movements in the market but you guys didn't pick it up. but it's important because it's important because you've got these series of puts over in europe. you've got the u.s. going, the series of puts in europe. relatively easy money. we expect some tightening at the year end but we didn't get them. i'm talking about bond markets. you see how spain, italy traded. so we're kind of nervous. the street is kind of out of paper so they can't screw it up right now. oh, shoot. i forgot to say hi to my mom! hi, mom! so that's important. because she'll get really mad if i don't. so, you have -- so you have -- >> you haven't said anything bad yet. it all sounds good.
>> i'll tell you bad stuff if you want to hear it. >> no, we don't want to hear it. >> bottom line, joe, there's a trillion dollars, you got more money coming in of stimulus, and i got this market next year. so i got all kinds of different markets right now. i got credit markets which we know a lot about. we're really big equity guys, too. and i got equity markets like credit markets. i got credit markets that are so -- they're not -- i wouldn't say they're in bubble territory, but they're rich. and the spreads are at pretty good levels right now. you know, and i'll tell you how rich they are. you know this country, ivory coast, cote d'ivoire, to speak french although my french accent sucks, we bought this paper, in 2009, when some other hedge fund was going under at nine cents. they had two civil wars since then, and they haven't been paid, they're just going to make their first coupon this month. that paper has a six hand.
a high six hand, 6%. i saw a piece of research, a company i really like, credit research, they were saying you're wund weighting this piece of people. how do you underweight. it's good credit. i like the credit. then i realized, because we don't own a lot of stuff, it was trading with a 5% handle. >> versus the ivory coast? >> but there was nothing wrong with the 5%. i mean 5% is, again, pretty -- now the spreads are not rich, are not bubble, but the spreads are there. but the interest rates are so low. but the actual yields are so low. >> are you shorting this stuff? >> no i would short with a trillion dollars of stimulus. the fed coming in in short. you could short it if you want. i'm not going to short it. okay. because something that's maybe rich, it's not bubble. we'll go bubble. okay. so you got to figure what will happen. this money has to go someplace. can either go and make that 500 something spread trade. now remember we got 500 yield. so the spread is still on a seven-year piece of paper close
to 500 still which isn't a wrong spread necessarily. but the absolute yield is kind of crazy. now there's an interesting thing with junk, right? so if you've got enough junk and you've got junk trading at 6%. you want to say i got junk at 6%. heck, that's like a 16 p/e on this crap that has -- it's not crap, by the way. some companies are very good companies. that have a limit to how high they can go because they have calls and everything else. so they're actually higher than that. so i can look at that and say, hmm, okay this stuff is there. i'm afraid to short it because i think there's a lot of stimulus. and then, and then i'm looking at the stoeshl. okay. geez, that other company bloomberg that does the stuff that we don't talk about on this tv. you look at their screen and look at next year's p/e. you don't have bloomberg up here. >> have it in the machine? >> we should have it. >> can't have it. >> bloomberg won't give it to us. >> they won't give it to you? >> no. >> bloomberg, macy's -- did you ever see the miracle on 34th street bloomberg?
cnbc bloombergs. >> but tell me where you were going. >> where i was going. i'm sorry to digress for a second. oh, i have to mention a couple of my friends, too, before i forget. i told them i wouldn't but i have to do it. >> i'll remind you later. >> i have to embarrass them. i'm sure they're sweating right now. but so you have these p/es, you have these inverse p/es, so you have the stock market, if you look at the stock market, you know, you look at what the p/eest for next year's forecast you see a 12 pe on the s&p, 12 handle "p" on the s&p. you see a 12 handle on the ndx. you could say apple's in there. but take apple out and you're still in the 13s in that index. >> cheap relative to what's only rich in the bond market. >> it's cheap relative to that rich. it's cheap relative to anything and the only market that hasn't really rose to new heights. a lot of this is because of the stuff going -- >> the bond market is rich but getting richer in your view? >> joe, i have a question for joe now. joe i -- >> i'm doing math. i'm -- >> i like to ask you questions.
>> you say if it's not on the teleprompter we're not going to come up with it. >> it's true. >> that i'm dyeing my hair. >> we have to get in a quick break. i can't wait to hear what you're going to -- >> i might not do it then. >> then do it now. >> why would you care about the break? >> because they're yelling at me. >> this is a real good part. tell them to calm down. >> fine >> you buying all the commercials? >> where were you -- what were you doing in the '90s? were you a broker? you were over here already doing this? >> as of '91. >> do you remember the '90s? you remember the p/es in the '90s? >> yeah. >> we'll talk about -- go to break now. >> no i remember the p/es in the '90s. >> we'll have our conversation. >> pretty high p/es, weren't they? was there any money creation? any money in the good economy in that period? was there something called y two kay? remember that? you remember y2k? >> the graph for being -- for preserving back then. >> the nasdaq went up four times
between '97 and 2000 peaked? >> then it went all the way back. >> then went up to 140 times p/e. >> are you saying that? >> no, i'm not saying that. i'm saying we should go to break. >> we're going to find out exactly what he's trying to say. >> still ahead, david tepper is going to be with us and a cnbc exclusive interview with richmond fed president jeff lacquer at 10:30 even on "squawk on the street." right now, take another quick look at the futures. you're going to see the dow futures up by about 54 points above fair value. s&p futures just over 7.
welcome back to "squawk box." let's get back to our special guest david tepper. founder, president and cio of $16 billion hedge und appaloosa management. when we last left you before the commercial we were all trying to get a read on where you were going with this in terms of the equity market. i think you were suggesting that
it's weakly priced. you can tell me. >> you think? >> that's what i thought. >> you are a keen analyst. >> you were waffling. >> i was waffling? >> you were giving signals. >> i was giving signals? >> the bond market was too high. >> listen at 12 times next years with these interest rates, with these fed, yeah, of course it's cheap. but you still do have the stuff that's going on in washington that's holding back everybody and everything. the question is how much does it mean, what will it do, when you're holding back people from the end of the year, because if it does blow up, the market will probably go down 2% or 3%. okay? that's what's going to happen. >> 3% you downsize right now. could it be 5%? sure, you know. if there's other things that can happen. but i think there's very limited downside. i think the market -- >> on the upside. >> a lot. >> listen, you had fisher on here on friday. fisher basically told you that. when i listen to fisher, i don't
know if you were listening to him. you talk but -- >> i'm sorry. >> tough morning. >> it is a tough morning. >> i'm sorry, i apologize. >> fisher, you know, when he was on there, what i kind of viewed what he was talking about, how good the economy is. how good it could be. you know, when he was talking i got the sense from listening to him that he's nervous that so much money coming in will push us up beyond what we should be in growth. beyond what we should be, you know, push us faster than inflation. although we have no inflation. unlikely to have inflation at the capacity utilize with the unemployment rate we're at. he had that nervousness. >> he's always been a little more -- >> but he sounded like hawkish but a real bull on the economy. okay, a real bull and every guy you have that's there, you know, will talk about the economy, will say how good it can be. people don't want to believe it but it can be really good. listen you keep that these guys
cannot mess it up. what should happen, why say 3%, i really think there's no downside in some fashion. because i think what they're going to do is they're going to do the plan "b," the senate bill, and the senate bill looks like they have to do that. if i were the republicans, and they don't do the senate bill, they're committing suicide. and i have to tell you one thing about politicians, they like to get elected. so i think they're going to do that. on the other hand you have a guy that's not up for election that really should be making suggestions and getting things done. okay? you know who that guy is? >> the president. >> i think you're indicating the president. >> the president of the united states of america, yes. he's the guy, everybody knows certain things have to get done. listen, taxes are going to go up in some fashion or another. everybody knows it. everybody knows, my grandmother and my grandfathers all lived to 72, 73. okay? my parents, you know, my dad's dead now, but he lived into his 80s. my mother is 80 and she's going to live a long time, i'm sure of this. okay?
but, you know, that's ten more years. i mean, there, you have this -- i guess medicare was 65 was passed, something like that? this is commonsense stuff. take the age up to 67. come on. this is commonsense. i don't want to hear about coal miners. make the coal industry pay for it or some industry that somebody will talk to. exclude them from the general legislation. >> that's what simpson-bowles does. >> it's so easy. it's so easy. and the president has to put this forward because people are afraid to say the words to put it forward because they were afraid of getting elected again. it is so easy. so, hopefully the president of the united states does what's easy and does what's right, and does try to fix his long-term problem because, look, here's the way the numbers work out. you guys know this and everybody knows this. if you do the senate bill you have no problem for ten years. you really have no problem. your debt to gdp is not going up for ten years. can you do the numbers. it's not going up for ten years. after ten years when joe is, you know, retying and other people are starting to retire you have
a real problem. you start escalating problem. we should really make a down payment on the problem now. if this president wants to have a legacy, if he truly wants to have a legacy he should attack this problem. you guys see that "lincoln" movie? >> yep. >> i haven't seen it. >> you saw it? you know what i'm talking about. you get it done. he should get it done with the democrats. get it done. now, if -- >> didn't see "the hobbit." can i ask you something? you remember when the first time you made the, what we keep talking about, your first appearance here, the tepper call. either the economy will improve or the fed will act, in hindsight i think i saw the markets react to what the fed did. did the economy actually react to all that? >> absolutely. >> so we would have -- is it a counterfactual or it did get better? it didn't get worse. it's pretty good. >> look, you know what i hear? it's amazing how many people said the money didn't matter. the fed didn't matter. they shouldn't have done this. they shouldn't have done it to
begin with. the fact of the matter is you have incredible, we're just talking about the credit markets. i can tell you what the credit markets were then. ivory coast was nine. these credit markets are anything but robust. they are robust. they are absolutely robust right now. and not just the credit markets in the marketplace. in auto loans, you're now seeing subprimes, sensible subprimes. because you should do some subprime in auto loans. sensible. that is getting done. that's why you're seeing -- >> the deleverage. but the economy itself -- >> is sub2%. >> but you still have other things that can happen. and now the thing holding back the economy, i do believe, the economy is going to grow faster if we can get through this -- >> okay, so -- >> i think now it's washington. >> you add the trillion dollars of the stimulus to what we're getting something positive out of washington, then it's not just the stock market that reabilities. you actually will see 2 1/2, 3, 3 1/2 -- see some gdp growth. >> the stock market just reacts.
people are getting auto loans. you do have -- >> 8% unemployment. >> stocks come up a long way since you -- >> will we get down to 6 1/2? >> the question about stocks is how much have they come up but they haven't come up that much in the p/e. that was 2010. we're going into 2013. so we have had years. so this is not crazy -- >> it's not. but i'm asking, is it as cheap relative to what we were looking at back then in >> it is really, really interesting. and i they to say how cheap it is because the money, and we could talk about it. you have another break? >> we're going to. >> buy all the commercials. >> much more from david tepper still ahead. wednesday on stock box, a trio of names on the markets. evercore partner ralph sh lossstein. larry fink and leon cooperman sense at 6:00 a.m. [ penélope ] i found the best cafe in the world. nespresso.
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considering a sale of part or all of the company. it plans to suspend palestinian cal development of its drugs to treat prostate cancer as it goes through this process. also sprint is buying the part of clearwire it doesn't already own for $2.97 a share. that deal was announced last hour. some clearwire shareholders had been holding out for a higher offer. and aig will reportedly raise up to $6.5 billion by selling the rest of the asian unit aia. that would mark a complete exit by aig from that business after nearly 100 years. aig sold part of the aia business back in the aftermath of the 2008 financial crisis. >> let's get back to our special guest, david tepper, founder, and chief investment officer of the hedge fund appaloosa management. last time, this time, couldn't we sum up a lot of what you said, it's crazy to fight the fed. i mean it's that simple? >> yeah, i mean, look, there's other events that can happen that can, you know, like i said,
d.c. can screw things up a little bit. but generally speaking the fed -- >> you think? >> generally thinking what the fed has done has worked in the real economy. what the fed has done has healed the markets. and there's no reason at this point in time to think that the fed doing something with so much liquidity in the markets, that's going to have any kind of long-term negative effect, particularly once we get over this, you know, this disagreement that's going on in d.c., we get something. >> then, you listen, we listen to richard fisher. you listened, too, right? you heard this -- you heard his hotel california analogy. >> mm-hmm. >> i called it a roach motel. you can check in but you can never check out. he seems to be, and a lot of people, the true -- there's a whole group of people that think the fed has gone way too far and they're going to come home to roost. the chickens are out there waiting or the roosters or whatever. you don't feel that way? i mean you are more near-term. you're worried about 2013. you're not worried about your investments in 2015 or '16?
>> i'm worried about when we talk about things going on in d.c. >> you're not worried about this huge balance sheet? >> i think the balance sheet can hold and slowly whittle down, okay, over time. so stop buying, and it whittles down. >> we won't need paul volcker in the future? >> listen, if they need to do it, all they have to do is start taking that balance sheet down and start detracting. >> that sounds easy, david. >> it's not easy but it will happen. his hotel, california, who wrote that song? >> eagles. >> i'll give him prince. >> we're going to party like it's 1999? >> yeah, we can party like it's 1990. listen, i'm not talking about the economy, i'm talking about -- you have so much money. >> raspberry. >> red beret. >> i didn't say red beret i cedras berry beret. >> i don't have monitors. >> so then, we will get to 6.5%
on track in unemployment? this will work? >> now you're asking me a different question. >> do you believe in the new normal? like the pimco idea that we're going to have subemployment, permanently. >> the question that the fed is taking a chance. this is a different way to put it. the fed is taking a chance that 6% is where you start triggering inflation, okay? that's the real trigger here. >> on unemployment. >> they're going to go to 6.5. i think the fed is that they're not going to trigger until you get to 6%. i think that's the best i get out of this. >> i don't know if that's right. the question is do you trigger at 7%. you could trigger the real economy and that's something fisher would be worried about. you have to pull back and you can't get to 6% and it is possible we have a higher employment rate. and i would love, listen, most important thing is people have jobs, and for people.
self-worth and such. there's the economy. there's markets. okay. in the big concern is inflation. okay that you're going to get inflation sooner. on the way to sooner inflation, remember it's very hard in this economy to have inflation when you have a high employment rate. the question is, right now, nobody's worried. it hasn't worked. people worried about inflation who haven't seen it. you're not going to see it. i'm not concerned until sometimes in the 7s. i'm a little more concerned than the fed. i don't know if they're right or wrong. at some point everybody's concerned about inflation. the way to inflation, on the way to inflation in the real economy, you're going to have another sort of -- >> what were your best picture -- >> it's inflation and asset prices. okay? so you -- there's a market and there's this. >> so you're going to miss out on it if you don't jump in on it. >> you have to be cognizant. if you look at the markets right now, okay, and what people are doing and you look at the options market.
we can talk about where they should be higher now because you have this binomial situation we're running. if you look at the option market, what are people more concerned about? if you go 30 points out of the money, the put call is a lot higher than the call fall. so i don't have to know anything else except the people are still cautious. otherwise we should have this whole even thing. remember the market can only go down as high as the market is. markets go up four times. so that's how people are set up, generally. and listen, i'm -- nobody likes to lose two or three or four or 5% if it happens at the end of the year because of something that happens in d.c. particularly the end of the year for a lot of hedge fund guys. we're probably more than anybody else willing to take a loss. we do that. we don't worry about it. >> a lot of people get money off the table. >> because they don't want to have that year-end loss. >> how many people had the year you had? >> we do -- when we're down we're put in positions. >> i know. so what was it that you did in the past year that got you 25% or 30%, and is it the same --
you have some of the same? >> you want to know? >> i do. >> this is easy. it's always easy when i come on the show to explain it. this is a market because there's a lot of street guys that are out of business, right? you know, they're not out of business but they won't take the risk because they're excluded. so here we go. we want to talk about the year. the year at appaloosa. so we go in december, we're waiting -- you have to anticipate what's going to come next and when things are going to move. so you got the year. in december you're sitting there, you're waiting, you say are there going to be ltr or not. if you waited for them to do the ltro in europe, then you invested, in december, and you invested fast, you could take a lot of money. so we made a lot of money. you know, on that first move. then it comes into april. okay. and you look at april and say look the economy looks like it's going to slowing. a week before the greek election, put calls were at 13. the put side not the call side. they basically said to me, hmm we're not concerned about greece. we're not concerned about the economy. why don't you have these put calls they're really almost for
free. we bought puts so we didn't have a loss in that drawdown. then we listen again. and we didn't have to -- again, we don't have to be that smart. okay. we're not that smart. again, we get into the next time, and draghi is talking about this, that the other, talking about this put and boy he did. he gave away this put. people not listening to it. you know what we did when we heard about that? we got invested. and that worked too. then we got into this election and said boy doesn't look like the market is going to be happy about this election, because obama is going to win. whether or not that was right or wrong, and they're going toish concerned about the fiscal cliff. we took down our position again. now when the market went down again, we said, okay, what are we going to do now? hmm, they're giving away call puts. call premium now. call premium traded really cheap. what should we do? let's buy call premium and that's what we did. and we got a little longer, into the end of the year. >> just comparing call premiums and put premiums versus a put versus call premium.
>> call vol, volatility, prices being cheap. >> versus but -- >> -- longer because the market came back down to 1350, 1360. we viewed that as too cheap given what was likely to happen. on worst case always has been and continues to be that they will do something like that senate bill. >> but that's where you stand right now on the assumption that d.c. will eventually figure something out. and -- >> listen, that's just a problem with the market. that's why you'll go down. if they want to commit political suicide and not do that plan "b," which they all say they're going to do and you have a lot of different ways they can do it, afterwards, they'll do that. >> but if they do that you would just buy more because you think ostensibly -- >> if they do it at that point in time you have your ten years taken care of. okay. and if the economy slows a little bit in the quarter, the money and everything else, people look right through it. >> these are s&p calls and puts you're buying? >> we bought stocks. we -- >> so you're -- >> we took a position and we
bought -- >> s&p calls? >> amazing -- >> if i give you names you won't be curious wraen more. you'll know the times. if you want to talk about past investments way back that we did in the past -- >> you just told us about the last year. because a lot of people are -- remember they said you got back in a lot of the banks and then you liented up on the banks. was that what you were doing? remember when the banks got down, all of like bank of america was five bucks, you bought them then you sold remember there was rumors you were selling out of bank america. >> well, listen, we had -- in 2011, we came in 2011, we lost a little bit of money in 2011. we came in to that about as bad as you possibly could come into it. we were very long financials. long some of the other markets, mortgages and junk, and sometimes are through that year we changed our opinion. i basically, you know, called in to mention i changed mine, there was a cautiousness. at that point.
and then we took down our whole book in 2011. if we didn't take down our book in 2011, we would have had a beyond horrible, horrible year. okay? and so we at that point in time, we took down our book to avoid that horrible, horrible year. you know, i show you from my investors, i want to try to do the best job i can and that's what we did in that year. you know, so that was then. >> okay. but -- so you do a lot of different things but if you do want to get long, just s&ps, is that what you do? if the volatility -- >> what we do with our book, appaloosa has historically -- appaloosa historically has a lot of long-term gains. appaloosa historically, like 50%, 60% long-term. okay? so that means we hold things. now, given that the markets are less liquid we probably have 60% of our book, 70% of our book in bonds, stocks, different things like that. we'll move them up and down based on the individual names.
and then we'll use the -- we'll use stock futures or options, our bond futures, to kind of, you know, get more invested or less invested at different points that we like so we can move the book up and down or sell the book. >> so when you see low call volatility, you might be buying individual stocks? that would cause you to buy? >> well, we would buy individual stocks because we like the individual stocks. because something's happening -- >> then you might add to it, with s&ps, futures -- >> in the whole market if we 240u9 the market was cheap, or -- if you have a situation, okay you have the greek election. you don't know how the greek election is going to turn out. but the vol is cheap. i don't know what's going to happen but i know the vol is cheap. it's either going to be good or bad. i can only lose the premium if it gets bad. if it gets good i'm going to make a lot of money. now i don't know where the premiums are today but in options i can go, i can be right or wrong and they'll do it. now i will minimize my losses, because if they really don't get it right in d.c., the market
will go down and i won't lose. if they get it right, i may not be able to, in this particular situation i may not be able to get invested fast enough is my concern because we're pretty big. that will get me invested. the worst case is i lose my premium, on the other side. so that's -- that's the strategy right now. when i have low vols. okay. when i perceive the vol is low for the event. the question is the vol -- i think in this particular case they were. >> if most of your stuff is long-term holdings that you have, did you change anything based on the idea that capital gains taxes are going up one way or the other with this fiscal cliff issue? >> yeah, we basically have, you know, taken a bunch of our long-term gains this year, to lock in these lower rates for our investors. you know, that's an easy thing to do in the market. the government lets you take gains. >> okay it in at 15% versus 23% or 44%. >> it's kind of the commonsense
to do that with some of your gains. i don't know if you do with all but you have to do with some of them. if you want to ask me about individual investments you can ask me in 2008, 2009. i know you're a big lehman guy. so -- >> i'm not going to put you on those. i was just -- that's okay. >> okay. but, i mean people probably want to know if you think gold is ever going to go, ever going to, i mean it went from 200 to 1700, pretty good move. isn't it? you're ready to go again, probably not given what you think about what the fed is not -- >> gold to me is a function of interest rates. if you think the economy is going to start moving, and the stock market starts moving, gold can move up because of so much money out there. on the other hand, if you have interest rates start to move, you're going to have a problem. so the question is when do our interest rates start to move. the interest rates won't start to move until you have the stock market goes up a lot. are the real economy that really improves. what's going to take one or both of those conditions to make
things happen. >> you think u.s. equities are the most attractive in the world right now? >> listen, the united states of america is a great, great place. it's a greater place than it was three years ago when we first talked. you know, i'm from pittsburgh, as you know. and you know, that's probably the center of one of the ranges, the biggest range out there for natural gas. we are, you know, low-cost energy producer in the world. i believe that unemployment will come down over time because of our natural advantages that we have in this country. so yeah, i mean i think the united states is a fantastic place. i think other markets, could you have bigger moves in the european market? could you have a bigger move in the japanese market because the levels they're trading at? yeah. but this market is a very good market. and i think that once we can get over this hump, if you will, you know, we could have, like i said -- >> you don't have to get too
complicated and look for -- >> like 57s 99. >> i'm not saying it's going to happen. i'm saying there's a possibility. i would just bet, you know. it's like you want to bet these guys in d.c. to do something, to help this country just get to where it was. get people to work. they can do it. they really can. >> is it enough, we talked to bob doll earlier who said he thinks businesses will, as long as there's some clarity, even if it's bad news in terms of what the tax setup is going to be, give them clarity and they can work with that. >> clarity is so important. we haven't had clarity in so long. whether it's obama care. we know what that is. if you don't like it, fine. but you have some sort of clarity and there may be some changes but you have relative clarity. just give us some clarity on these tax rates. just get it done. get something done. and it would be great. it was very cheerful to know that they're talking about moving, you know, so we won't have another deadline in two months. if you can get something done without that deadline, you know, it's a really good thing. and not only for the markets,
gut for the real economy. and you know, really for, you know, people to start working. >> if you were the president would you take a deal without that? >> or would you compromise now if you were the president? >> what i would do if i were the president, hard job. if i was the president, i would really lead on the medicare stuff. that everybody knows has to get done. >> you'd push more on that than you would -- >> that's -- >> i would want both. i mean, it's on the table now. you saw it. so it's on the table. they want the president to come out front. it's very hard for these guys, let's face what's hard. it's hard for republicans to individually say i want to cut this from medicare, i want to raise this age. everybody knowles it needs to be done. there's one leader. one real leader in this country, and he has to do it. okay. that's all -- i mean, he's the guy, and you know, i agree with him, though, i would like to see that, you know, not cut out like guys are talking about. but move -- let the economy get some real running room.
let people -- >> will he rise to the occasion? >> i personally don't know the guy. >> so i -- >> i hope he does that. i hope he -- what do you guys have -- >> rise above. that's for everybody. >> listen, it's not a rise above for everybody. you really have -- it's the president to show that hey, this is what he'll do on this spending side, and that like i said, in lincoln to knock some heads around, and whatever it is, you know, like in the lincoln movie and get it done. and get it done. he can do it. he can get done. if he really wants it, if he really wants to get these democrats up, get that done, and the republicans, they basically are -- they put rates on the table. it will happen on that side. listen, raise my rate. i don't care. get rid of this stupid -- some guys are going to be bad at me. but get rid of this stupid carried interest thing. i hope it's gone. it's enough already with that. >> i have a bernanke question for you. that relates to all of this. there have been reports,
including some of my own reporting that suggested that he may ultimately step down in 2014. if that happens how does that change your view on all of this? >> who is taking his plate? is it -- >> that's the question du jour. could be yellen. some people said geiger could come back. >> as long as you're having a democratic at this president who has not been on the other side, as you had some of the republicans on the other side, i would not worry that much about a policy change. i mean if you have dudley or yellen, or somebody of that ilk or anybody that they're likely to appoint it's just not going to be that difference in policy. i mean so i'm not worried about bernanke. would it have made a difference if you had a republican, if mitt romney was there and it would have gone different? yeah, could have made a difference. but i don't think you're going to get that much different with policy the markets should be concerned at all about it. >> david, really quickly. we're out of time. remind you about your friends you were going to call out? >> yeah, i was supposed to
mention a couple of my friends who have crushes on, who is the australian anchor? >> mandy. >> i'm not going to mention their names right now, i just scared them and their heart just stopped. but i -- i'm just going to give them a huge break on that one. not going to mention james' name or phil's name or any of my other friends. not going to mention their names. >> well done. >> very kind of you. >> i'm a nice guy like that. >> david, thank you very much for coming in. >> you can call him when you -- like if you change everything, don't, you know, you need to tell us. >> need to tell you. you guys, -- just for your producer, she has called me over the last two years 105 times. i call her man eater. i'm sure now she's going to be killing me when i walk off this set here. >> we're thrilled to have you. >> thank you. >> thank you. >> when we come back, we'll get the latest buzz from wall street. we'll be checking in with jim cramer at the new york stock exchange. stick around. squawk will be right back. i love the holidays.
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what the fed is telling you it's going to do, he thinks through 2015, you would be crazy to fight the fed. he thinks the money has to go somewhere. he thinks the stock market is the best place to go. the he said he thinks it's relatively undervalued. do you agree? >> david tepper is great. i wish he was still on, i would say, thank you so much for being level-headed, terrific, offering a good view that's not about the next 2%, 3%, 4%. i'm so in tepper's camp, i don't want to be an idolotrist. he's fabulous. >> jim, the other thing he said was this whole idea about inflation. people worrying about inflation, whether the fed is going to miss the ball on that. he said if that happens you'll have an inflation of another kind, asset inflation. so you'll miss out if you're not
invested as we head toward that. >> between the time since i listened to him and now, i checked mortgage rates all day to figure out what i can buy. i'm just thinking, look, he's so dead right. that there must be asets galore. i can't do stocks. i'm looking at real estate. all this conversation you had, which i think was just superb. >> he has a way of laying things out and making it seem so obvious and clear. he did this to us back in 2010 when he talked about either the economy would improve or the fed would be there. everything was going up. that was a clarifying moment. jim, it sounds like you agree that you think this moment might be, too? for me it was a lot clearer after he said all that. >> i am worried about that 3%, 4% that comes from the class just because i think people who watch our shows may be worried, clearly a buying opportunity he said. i love the fact that he said, listen, the federal reserve, it's worked.
what bernanke does works. most people come on, they slide bernanke and say, on the one hand it could be good, on the other hand it could be bad. tepper lays out a vision, a world view vision, very old-fashioned, a lot of wails t ways the people used to do. i think david tepper is one of the best guests we can bring on the show. >> thank you, jim. i agree. several stocks on the move ahead of the opening bell. only one can be the stock of the day. is it in your portfolio? we've got the answer when we return. omnipotent of opportunity. you know how to mix business... with business. and you...rent from national. because only national lets you choose any car in the aisle. and go. you can even take a full-size or above. and still pay the mid-size price. i could get used to this. [ male announcer ] yes, you could business pro. yes, you could. go national. go like a
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